Frydenberg says ARENA de-funding is a “transfer”, not a strip

The future of the Australian Renewable Energy Agency remains up in the air, with both the Coalition and the Labor Party fudging on commitments to funding for innovation of renewable energy technologies.

The Coalition is seeking to remove $1 billion in funds from ARENA as part of its omnibus budget repair package, and is calling on Labor to approve the move because that is what Labor brought to the table in its budget commitments in the election campaign.

Labor, having set up ARENA in 2012, is now trying to duck and weave on the issue, despite increased warnings that stripping ARENA of funds will kill R&D in Australia, and create a big “valley of death” that will force new technologies and start-up companies overseas.

Environment and energy minister Josh Frydenberg also fudged the issue on Thursday morning, claiming that the $1 billion in grant funding for ARENA had been transferred to the new Clean Energy Innovation Fund.

“It’s gone from being a grant program to a loan program,” he told ABC Radio National.

No, minister, it’s gone altogether. That’s why you need to pass legislation. The $1 billion for the CEIF is a transfer of existing funding from the Clean Energy Finance Corp. The $1 billion stripped from the ARENA budget, on the other hand, will simply disappear.

Labor’s environment spokesman Tony Burke hardly fared any better on ABC’s Lateline last night, claiming that Labor, while proposing to strip $1 billion from ARENA (apparently because it did not like the tenor of some NGO press releases) was planning to “reinvest” $300 million in to renewable energy.

“It’s also the case that the policy we took to the election did involve taking the savings from ARENA but at the same time, injecting $300 million into renewables,” Burke said, after conceding that renewables did have something to do with the environment.

He then tried to claim that the $300 million was an additional investment.

But that’s wrong too. Stripping $1 billion from ARENA leaves $300 million in the budget to be spent out to 2022 – which Labor planned to direct towards solar thermal and storage and community energy. In no way is it a “reinvestment”, nor is it “additional investment.

Such is the way of politics in Australia. Neither mainstream party says what it believes or believes what it says. And on live radio and television, might as well just make it up as you go along.

That’s why we end up in this terrible pickle. Meanwhile, Martijn Wilder, the chairman of ARENA, was defending the agency on radio, pointing out its contribution to not just the emissions reduction effort, but to the economy.

This was a theme picked up by ACT minister Simon Corbell on Wednesday when he said that the debate had been framed as an economic cost, when it should be seen as an economic opportunity.

Around the same time that Labor considers its position on the budget repair package that includes the ARENA funding, the ARENA board on Monday will consider the proposed grants of $100 million to 20 projects representing more than 750MW of capacity, in what could be its last major funding round.

The costs of solar have come down so much, Wilder noted, thanks in part to the ARENA tendering process, that new projects will only need grants representing 10 per cent of the project cost, rather than 50 per cent previously.

Insiders suggest that means that more than half of the 20 shortlisted projects will get some sort of funding, either by number, or by capacity.